Is Canadian Solar a Good Stock to Buy?

NASDAQ: CSIQ | Canadian Solar Inc. - common shares News, Ratings, and Charts

CSIQ – The renewable energy space, especially the solar energy sector, has been attracting significant investor attention thanks to falling costs and initiatives by governments worldwide to transition their economies to sustainable-energy-based futures. As such, we think it is wise to bet on Canadian Solar (CSIQ), which is trading at a lower valuation to its peers despite hitting an all-time high earlier this year.

Founded in 2001, Canadian Solar Inc. (CSIQ) is a leading manufacturer of solar photovoltaic modules and provider of solar energy solutions. The company operates primarily through two segments — Module and system solutions (MSS) and Energy. CSIQ has delivered roughly 52 GW of solar modules to thousands of customers in more than 150 countries through the end of 2020. This is sufficient to meet the clean, green energy needs of roughly 13 million households.

CSIQ gained 135.2% over the past six months based on its ability to overcome market challenges and  to focus on executing its strategies. It closed yesterday’s trading session at $55.62, 6% below its all-time high of $59.19, which it hit on January 7, 2020. The stock is currently trading at a trailing-12-month P/S of 0.97x, which is much lower than the industry average of 4.19x.

The company reported impressive results for the third quarter ended September 30, 2020, with its solar module shipments exceeding guidance. Also, CSIQ took a major step forward during the third quarter with a successful pre-IPO equity raising by CSI Solar Co., Ltd., its MSS subsidiary. CSIQ’s geographical diversification, financial strength and price momentum have helped the stock earn a “Strong Buy” rating in our proprietary rating system.

Here is how our proprietary POWR Ratings system evaluates CSIQ:

Trade Grade: A

CSIQ is currently trading above its 50-day and 200-day moving averages of $46.80 and $34.82, respectively, indicating an uptrend. Moreover, CSIQ has gained 43.5% over the past month, reflecting  solid short-term bullishness.

The company’s top line has climbed 20.3% year-over-year to $914.4 million for the third quarter ended September 30, 2020, driven by higher module shipments and project sales. Total module shipments have increased 33% year-over-year to 3,169 MW. Its gross profit increased 21.2% sequentially to $178.4 million, yielding gross margin of 19.5%. And its EPS of $0.15 surpassed the consensus estimate by 400%.

On January 7, the company announced that its wholly owned subsidiary, Recurrent Energy, had completed the sale of the 144 MWac Pflugerville Solar project to Duke Energy Renewables, a subsidiary of Duke Energy Corporation (DUK). On December 22, CSIQ announced the sale of its remaining 30% ownership of the Big Fish SPV S.r.l. and Iron SPV S.r.l. solar projects to Falck Renewables. Buy & Hold Grade: A

In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade considers, , CSIQ is well positioned. The stock is currently trading just 6% below its 52-week high of $59.19, which it hit on January 7.

The company’s net revenue has grown at a CAGR of 4.4% over the past three years, while its EBITDA increased at a CAGR of 40.5% over the same period. Also, its EPS has increased at a CAGR of 112.5% over  the past three years.

CSIQ had generated 30% growth in shipments since 2013 and has generated nearly $1.4 billion in cash since 2013.

Peer Grade: B

CSIQ is currently ranked #5  of 17 stocks in the Solar industry. Other popular stocks in the solar group are Renesola Ltd. (SOL), Sunrun Inc. (RUN), and First Solar, Inc. (FSLR).

SOL and RUN beat CSIQ gaining 1507.9%, and 494.7%, respectively, over the past year, while FSLR returned 81.4% over the same period.

Industry Rank: B

The Solar industry is ranked #31 out of 123 StockNews.com industries. With a gradual decline in the cost of storage, solar energy is expected to lead the change to a renewable energy-driven future.

This industry faced several problems amid the pandemic, including  a temporary halt in production by some units , but demand for its products has since been gaining pace. As solar energy becomes much more mainstream and easier to use with  technological advancements, this industry is expected to thrive in the near term.

Overall POWR Rating: A (Strong Buy)

CSIQ is rated “Strong Buy” due to its short- and long-term bullishness, solid growth prospects, and underlying industry strength, as determined by the four components of our overall POWR Rating.

Bottom Line

CSIQ has the potential to advance  in the upcoming months despite gaining more than 136% over the past year, based on its continued business growth, favorable earnings and revenue outlook, and favorable analyst sentiment.

Analyst sentiment, which gives a good sense of a stock’s future price movement, is good for CSIQ. It has an average broker rating of 1.64, indicating favorable analyst sentiment. Moreover, CSIQ has an impressive earnings surprise history with the company beating consensus EPS estimates in each of the trailing four quarters.

The consensus revenue estimate of $4.93 billion for 2021 represents indicates 43.6% increase year-over-year. Its EPS is expected to grow 20.4% in 2021, and at a rate of 20% per annum over the next five years.

Want More Great Investing Ideas?

“MUST OWN” Growth Stocks for 2021

Is This ANOTHER Stock Market Bubble?

7 Best ETFs for the NEXT Bull Market

5 WINNING Stocks Chart Patterns


CSIQ shares were trading at $53.77 per share on Friday morning, down $1.85 (-3.33%). Year-to-date, CSIQ has gained 4.94%, versus a 0.41% rise in the benchmark S&P 500 index during the same period.


About the Author: Manisha Chatterjee


Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
CSIQGet RatingGet RatingGet Rating
SOLGet RatingGet RatingGet Rating
RUNGet RatingGet RatingGet Rating
FSLRGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

3 Signs of a NEW Stock Market Bubble

Value investors are pounding the table that the stock market (SPY) is already in bubble territory not unlike 1999. Indeed they are right about the lofty valuation levels. But they are wrong that it’s time to get ready for the next bear market to emerge. Check out Steve Reitmeister's game plan to ride the bubble up and then parachute out at the right time. Read on for more...

:  |  News, Ratings, and Charts

Top 10 Value Stocks

The S&P 500 (SPY) has shown mixed results in the last week, but if you are a value investor, then yesterday was a big day. That’s when we revealed to our readers the fatal flaws of traditional value investing and the solution to this problem—our Top 10 Value Stocks strategy. Read on below to find out more about this 3-step process and its +38.63% annual returns…

:  |  News, Ratings, and Charts

3 Housing Market Stocks to Buy on the Dip

The housing market's strength is going to continue well into the next decade due to favorable supply and demand factors.

:  |  News, Ratings, and Charts

Finding Gems Amid the Market Wreckage

The S&P 500 (SPY) selloff has intensified this past week. So far, it’s looking and behaving like a culmination of the market’s rotation out of growth stocks. We’ve seen big declines in certain parts of the market from the big winners of 2020 that peaked in mid-February. Since their recent highs - the cannabis ETF (MJ) is down 44%; the cloud computing ETF (WCLD) is down 27%; and the semiconductor ETF (SMH) is down 14%. In today’s commentary, I cover some of the opportunities that have been created, ways to take advantage, and what I’m monitoring when it comes to the broad weakness in the market. Read on below to find out more…

:  |  News, Ratings, and Charts

3 Housing Market Stocks to Buy on the Dip

The housing market's strength is going to continue well into the next decade due to favorable supply and demand factors.

Read More Stories

More Canadian Solar Inc. - common shares (CSIQ) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All CSIQ News